Beach condo house hack

[Neil Henderson]

Investment Info:

Condo buy & hold investment.

Purchase price: $690,777
Cash invested: $220,000

Purchased this existing vacation rental fully furnished. Ran it as a 100% vacation rental through the Summer of 2021 before we moved into it as a house hack in October of 2021. It's one-half of a two-unit condo that was 5bd, 4ba. The bottom level had two bedrooms and one bathroom with a separate side entrance on the side of the property. We converted that bottom level into a 1bd, 1ba kitchenette that we rent out as a short-term rental. We live on the top two floors in a 3bd, 3ba area.

What made you interested in investing in this type of deal?

We had a great experience doing a short-term rental house hack of our home in Las Vegas, NV. We wanted to move to Carolina Beach, NC for a number of reasons, live across the street from the beach, and self-storage partners. The revenue from the short-term rental covers all our housing expenses, mortgage, taxes, insurance, utilities, and we get to live across the street from the beach.

How did you find this deal and how did you negotiate it?

It was an on-market deal that we used a local real estate agent to purchase and negotiate. The market was extremely hot so we just bid as high as we thought made sense.

How did you finance this deal?

Residential lender, 20% LTV.

How did you add value to the deal?

We converted the bottom level from a 2 bedroom, 1 bath to a 1 bedroom, 1 bath, kitchenette with a separate entrance, owner lock-out, and outdoor shower.

What was the outcome?

We began renting in early June of 2022. The short-term rental income has covered more than double the total expenses. Obviously, it's summertime, which is the high season, but we project its 12-month revenue should at least break even all of our housing expenses, and we are living across the street from the beach.

Lessons learned? Challenges?

Because the market was rising so fast, our appraisal came in low. Luckily we had a rockstar lender who was able to scramble to allow us to close without bringing too much more money to close. The renovation took about 3 times longer than we expected and ended up about $8,000 over budget. Finding good cleaners in a busy vacation market is a major challenge, as is dealing with linens.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Abby Harris of Nest Realty in Carolina Beach, NC.
Partick Stoy from MC Mortgage Group in Wilmington, NC